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There were no standard tickets or central settlement procedures. Agents
knew all the air fares in their markets, and commissions were set by govern-ment-approved airline agreements.
Agents also put clients on ships, which were transportation, and some sold
a lot of bus tickets — buses, not motorcoaches. Retailers booked all these
things by telephone.
In less than 25 years, all that changed. The need clause went away (1959),
standard airline tickets and a central reporting system were rolled out (1964),
CRTs came to agency desktops (1976), airline deregulation became law (1978),
and fixed commissions ended (1980).
Certain of these events — elimination of the need clause, deregulation
and an open commission environment — fueled a huge growth in agency
numbers. These were the days when airlines competed to raise pay, not the
Events fed on each other: Carriers needed agents when, after deregulation,
the number of airlines proliferated and they competed based on price. The
madly competitive environment fostered more, and more complicated, fares.
The GDSs made complex fare structures possible; such fares made GDS market penetration essential.
In addition, corporations and the government turned to agents because
managing their travel spending had become so complicated.
The buyer’s increased need for help when shopping for air changed the nature of the agency, too.
Air came to account for a large majority of the average agency’s sales, and
agency workplaces were peopled with computer experts and, dare we say it,
order takers, diminishing the value of the true consultant.
Now comes the next transformation of the agency business, triggered by
airline commission cuts (1995-2002) and the Internet (you choose the date).
These fostered further agency consolidation, creating some very large businesses, especially on the corporate side. Leisure agencies renewed their focus
on consultancy and specialty niches, and service fees became a way of life for
Online agencies were born and blossomed, sometimes becoming huge businesses themselves. Countless others also shunned the brick-and-mortar setup
and took their businesses home.
So, the true travel agent story is nuanced. ARC agency counts are down but
the number of travel sellers is an uncertain thing. The dollar value of agen-cy-booked travel was an estimated $254.5 billion in 2006, a number that has
risen even as agents have lost or pushed air tickets off their shelves. In 1995,
air accounted for 61% of agency sales; in 2006, it was 27%.
Broadly speaking, agents do two things: manage travel purchasing and sell
the wild, weird, wonderful world. They weren’t airline specialists in 1958, and
they aren’t now. — Nadine Godwin
Travel agency locations (1958-2007)
1958 through 1964: The statistics include Canadian locations because Canada was part of the settlement system at the time.
1965: First year for which ARC has location counts for U.S. agencies only. Canada left the settlement system in 1980.
1982 and 1996: In 2007, ARC locations dropped to fewer than in 1982, after having reached their peak in 1996.
Sales settled through ATC/ARC (1965-2007)
Sales ($ Billions)
*Earliest year for which ARC has these statistics
The term “travel agents” didn’t appear in the
Airline Deregulation Act, but that didn’t stop
deregulation from hitting the agency industry
like a freight train.
The airline industry’s all-powerful regulator,
the Civil Aeronautics Board, had the power to
grant antitrust immunity to airline activities that
were deemed to be in the public interest, such as
setting international fare levels, managing travel
agency appointment and settlement systems and fixing commission rates.
Deregulation began to upset this applecart even before the
law was passed when an IATA agreement governing travel
agent commissions came before the CAB. IATA’s commis-
sion agreement became a test case of market forces. Why, the
CAB asked, should travel agent commissions be a fixed percentage set by agreement among the airlines?
The CAB decided that they should not and decreed a permanent free-for-all for international commission rates in 1978,
even before the passage of the Airline Deregulation Act.
Move importantly, the CAB decided to come back to the
topic as it pertained to domestic transportation, and it ordered
its staff to lay the groundwork for an investigation of the domestic airline agreements governing travel agents, which were
administered by a division of the Air Transport Association
called the Air Traffic Conference.
Thus began what the Board euphoniously called: “An investigation into the competitive marketing of air transporta-
t ion,” or the Competitive Marketing Investigation
f or short.
T he CMI involved an army of lawyers, wit-n esses, testimony, statistical reports and leg al briefs and 57 days of hearings before
a n administrative law judge. Nearly two
years after the case began, he recom-m ended continued antitrust immunity
f or the ATC’s agency programs. The CAB
r eversed him 18 months after that, in
December 1982, ordering an end to antitrust immunity.
Critics simultaneously attacked the decision in Congress and
in the courts, but without success. In the waning months of
1984, the last efforts to overturn the CAB decision died away on
Capitol Hill. The case dragged on in the U.S. Court of Appeals,
which affirmed the decision in March 1985, three months after
the CAB itself ceased to exist.
There is no short version of the CMI story. Suffice it to say
the decision ripped up the ATC agreements that governed the
domestic airlines’ travel agency system and led to the creation
If there was one key word that is indelibly associated with
the CMI, it’s the word that the CAB chose to describe what it
viewed as the most noxious aspect of the old ATC. That word
Until that time, the airline members of the ATC agreed
among themselves that they would not do business with, or
compensate, travel agents who did not have ATC accreditation.
If you were an aspiring travel agent, you had to get ATC approval. Without antitrust immunity, that would be restraint of
trade. When the CAB withdrew antitrust immunity, exclusivity
went away, and a good deal more besides.
The ATC, which was essentially a club, morphed into the
Airlines Reporting Corp., an airline-owned business.